Financial Awareness - Risk, Stability & Emerging Finance
Which of the following Government Securities is considered a risk-free benchmark for pricing other securities in India?
Which of the following Government Securities is considered a risk-free benchmark for pricing other securities in India?
medium Q7 of 15
Step-by-Step Solution
Step 1: Understand benchmark securities
Dated Government Bonds are long-term, risk-free securities used as benchmarks for pricing other debt instruments.Step 2: Analyze options
Treasury Bills are short-term and less commonly used as benchmarks for long-term pricing; corporate bonds and commercial papers carry credit risk.Final Answer:
Dated Government Bonds → Option AQuick Check:
Dated Government Bonds = Risk-free benchmark securities ✅
Quick Trick: Long-term government bonds serve as benchmarks.
Common Mistakes:
- Confusing short-term T-Bills or corporate bonds as benchmarks.
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